CONTRACTORS....START YOUR RENOVATIONS!
I closed on My Third Property on July 31, 2018. It was quite the birthday present. Literally.
It always feels amazing to pick up a new property. There's always a sigh of relief, because the process of finding a suitable property, running the numbers, offering, negotiating, and locking it up is time consuming (at least being a 1-man show). It takes dedication, motivation, drive, and effort.
But, in the grand scheme of things: the journey has just begun if you're dealing with a property needing repairs or renovations.
I had a third-party property inspector take an in-depth look at the duplex prior to closing, so I was pretty aware of most of the needed repairs. I trusted the assessment, but now it's time to get my property manager in there to do a proper walk-through and prepare a scope of work. Because the lower unit is already occupied with a tenant, a majority of the work needed is for the vacant upper unit.
Here's the repair estimate I received:
THE TOTAL COMES TO: $4,805.50
A littleeeeeeee high in my opinion...
The good news? Remember, I got $4,500 in credit back at closing for repairs...so that basically covers this.
The bad news? This scope of work doesn't include any crawlspace repairs or electrical box repairs. So, that's a little scary. I'll have to spend more than expected to get this property into shape. Also, I noticed they double counted an item (replace ceiling fan - $195), which I'll call them out on.
There are also a few items on there that seemed WAY too overpriced, but at the end of the day, I realize I have a naturally frugal mind which is what's causing the pain. I personally don't like to spend money and will always look for cheaper options. BUT, when it comes to investing out-of-state thousands of miles away, you have to realize you're outsourcing and paying for jobs to be taken care of for you. These are jobs that don't require any of your time or effort and there's amazing value in that. It's not the end of the world to pay for repairs that are needed and have someone else take care of everything from start to finish.
I approve the Scope of Work and my property manager (PM) gets things started with my contractor. Work is scheduled to start on 8/21 and be completed by 8/27. We're hoping to get the upper unit on the market starting 8/29.
IMPORTANT NOTE REGARDING PAYMENT: my PM initially requested full payment for the contractor, but I was adamant about not paying it all up front. We've all heard the horror stories of people getting burned by contractors and running away with money. We agree that I'll pay 50% now (which is still a little high) and 50% upon completion. Don't be afraid to ask for what you're comfortable with. So, protect yourself (especially if you're investing from a distance) and DON'T pay for everything up front. Give them incentive to finish the job properly and on time!
Oh yeah coincidentally, I also book a flight out to Indy (it happened to be the optimal time for me to get out there). I hope to see the finished unit if it's still not rented by the time I arrive in September.